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BA’s owner hit by competition on key routes

British Airways new Boeing 787 Dreamliner is welcomed at Edinburgh Airport after it was added to the fleet last year. Picture: Ian Rutherford

British Airways new Boeing 787 Dreamliner is welcomed at Edinburgh Airport after it was added to the fleet last year. Picture: Ian Rutherford

  • by SCOTT REID
 

BRITISH Airways owner International Airlines Group (IAG) risks missing its profit target as the firm gets buffeted by competition on key routes.

The group – formed from the merger of BA and Spain’s Iberia in 2011 – will this week attempt to reassure investors that it remains to track to meet its target for operating profits of £1.8 billion (£1.4bn) by next year.

But the sector has been jolted by warnings from Germany’s Lufthansa and Air France-KLM caused by competition from Middle Eastern carriers on European and US routes. IAG is slashing jobs at loss-making Iberia and benefiting from lower fuel costs, but opinion is divided over whether it can still hit the 2015 goal.

Cantor Fitzgerald analyst Robin Byde estimates the group will miss the 2015 target, instead reaching £1.5bn.

House broker Deutsche has cut its 2014 earnings forecast by 10 per cent to £1.4bn but argues that the scheduled job cuts and the “unique strength of BA in Europe” will carry it through to its 2015 target.

 

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